Transcribed Image Text: 12/8/2020 CengageNOWv2 | Online teaching and learning resource from Cengage Learning Statement of Cash Flows-Indirect Method The comparative balance sheet of Merrick

Transcribed Image Text: 12/8/2020
CengageNOWv2 | Online teaching and learning resource from Cengage Learning
Statement of Cash Flows-Indirect Method
The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:
Dec, 31, 20Y9 Dec. 31, 20Y8
Assets
Cash
$245,780
$227,580
Accounts receivable (net)
89,040
81,740
241,990
Inventories
251,340
Investments
93,760
Land
128,920
Equipment
Accumulated depreciation-equipment
277,310
213,960
(64,920)
(57,700)
Total assets
$927,470
$801,330
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors)
$167,870
$157,860
Accrued expenses payable (operating expenses)
16,690
20,830
Dividends payable
9,270
7,210
Common stock, $10 par
50,080
39,270
Paid-in capital in excess of par-common stock
188,280
108,980
Retained earnings
495,280
467,180
Total liabilities and stockholders’ equity
$927,470
$801,330
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $109,700 cash.
d. The common stock was issued for cash.
e. There was a $65,760 credit to Retained Earnings for net income.
f. There was a $37,660 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use
the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from (used for) operating activities:
Net income
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation
Loss on sale of investments
1/2
Changes in current operating assets and liabilities:
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CengageNOWv2 | Online teaching and learning resource from Cengage Learning
Increase in accounts receivable
Increase in inventories
Increase in accounts payable
Increase in accrued expenses payable
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Net cash flow from operating activities
Cash flows from (used for) investing activities:
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Cash received from loss on sale of investments
Cash paid for purchase of land
Cash paid for purchase of equipment
Net cash flow used for investing activities
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Cash flows from (used for) financing activities:
Cash received from sale of common stock
s et
D80,02
Cash paid for dividends
Net cash flow from financing activities
Net increase in cash
Cash balance, January 1, 20Y9
Cash balance, December 31, 20Y9
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